Instructions For Form 1066 - 2016 (Page 7 of 9) in pdf

information return on Form 3520-A,

on the startup day with fixed terms and

Other nondeductible amounts (such

Annual Information Return of Foreign

that are designated as regular interests,

as losses from prohibited transactions

Trust With a U.S. Owner. For details,

if:

and expenses connected with the

see the Instructions for Form 3520-A.

production of tax-exempt income),

1. Such interest unconditionally

Deductions allocable to prohibited

To report information required under

entitles the holder to receive a specified

transactions,

section 6038B the REMIC may be

principal amount or other similar

Expenses recorded on books not

required to file Form 926, Return by a

amounts; and

deducted on this return, and

U.S. Transferor of Property to a Foreign

2. Interest payments (or similar

Taxable income not recorded on the

Corporation, or Form 8865, Return of

amounts), if any, with respect to the

books this year.

U.S. Persons With Respect to Certain

interest at or before maturity are

Foreign Partnerships. See the

payable based on a fixed rate (or at a

instructions for these forms for more

Schedule Q

variable rate described in Regulations

information.

section 1.860G-1(a)(3)), or consist of a

Quarterly Notice to

specified portion of the interest

Item L—Sum of the daily accruals.

Residual Interest Holder of

payments on qualified mortgages and

Enter the total of the daily accruals for

REMIC Taxable Income or

this portion doesn't vary during the

all residual interests for the calendar

period that the interest is outstanding.

Net Loss Allocation

year. See section 860E(c)(2) for details.

The interest will meet the

Schedule L

Purpose of Schedule

requirements of 1 even if the timing (but

Balance Sheets per Books

Schedule Q (Form 1066) shows each

not the amount) of the principal

The amounts shown should agree with

residual interest holder's share of the

payments (or other similar amounts) is

the REMIC's books and records. Attach

REMIC's quarterly taxable income (or

contingent on the extent of prepayments

a statement explaining any differences.

net loss), the excess inclusion for the

on qualified mortgages and the amount

residual interest holder's interest, and

of income from permitted investments.

Line 1a—Cash flow investments.

the residual interest holder's share of

These are any investments of amounts

An interest will still qualify as a

the REMIC's section 212 expenses for

received under qualified mortgages for

regular interest even if the specified

the quarter.

a temporary period (not more than 13

principal amount of the regular interest

months) before distribution to holders of

Although the REMIC isn't subject to

(or the amount of interest accrued on

interests in the REMIC.

income tax (except on net income from

the regular interest) can be reduced as

prohibited transactions, net income from

a result of the nonoccurrence of one or

Line 1b—Qualified reserve assets.

foreclosure property, and contributions

more contingent payments with respect

The term “qualified reserve asset”

made after the startup day), the residual

to any reverse mortgage loan held by

means any intangible property which is

interest holders are liable for tax on their

the REMIC if, on the startup day for the

held for investment and as part of a

shares of the REMIC's taxable income,

REMIC, the sponsor reasonably

qualified reserve fund. For a definition of

whether or not distributed, and must

believes that all principal and interest

qualified reserve fund, including

include their shares on their tax returns.

due under the regular interest will be

exceptions, see sections 860G(a)(7)(B)

paid at or prior to the liquidation of the

and (C).

Note: Schedule Q (Form 1066) is a

REMIC.

separate tax form that isn't part of Form

Line 1c—Foreclosure property. This

Schedule M

1066.

is any real property (including interests

Reconciliation of Residual

in real property), and any personal

General Instructions

property incident to such real property,

Interest Holders' Capital

For each calendar quarter, complete

acquired by the REMIC as a result of the

Accounts

Schedule Q (Form 1066) for each

REMIC's having bid in the property at

Show what caused the changes in the

person who was a residual interest

foreclosure, or having otherwise

residual interest holders' capital

holder at any time during the quarter.

reduced the property to ownership or

accounts during the tax year.

File Schedule Q with Form 1066. Give

possession by agreement or process of

one copy to the residual interest holder

law, after there was a default or

The amounts shown should agree

by the last day of the month following

imminent default on a qualified

with the REMIC's books and records

the month in which the calendar quarter

mortgage held by the REMIC.

and the balance sheet amounts. Attach

ends. Keep one copy with a copy of

Generally, this property ceases to be

a statement explaining any differences.

Form 1066 as part of the REMIC's

foreclosure property at the close of the

records.

third tax year following the tax year in

Include in column (d):

which the REMIC acquired the property.

Tax-exempt interest income,

Specific Instructions

See sections 860G(a)(8), 856(e), and

Other tax-exempt income,

On each Schedule Q, enter the name,

Regulations section 1.856-6 for more

Income from prohibited transactions,

address, and identifying number for

details.

Income recorded on the REMIC's

each residual interest holder and

books but not included on this return,

REMIC. For each residual interest

Note. Solely for purposes of section

and

holder that is an individual, you must

860D(a), the determination of whether

Allowable deductions not charged

enter the residual interest holder's social

any property is foreclosure property will

against book income this year.

security number (SSN) (or individual

be made without regard to section

Include in column (e):

taxpayer identification number (ITIN) for

856(e)(4).

Capital losses over the $3,000

a resident or nonresident alien). For all

Line 7—Regular interests. These are

limitation (for a REMIC with a startup

other residual interest holders, you must

interests in the REMIC that are issued

day before November 12, 1991),

enter the residual interest holder's EIN.

-7-

Instructions For Form 1066 - 2016 Page 7

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